Posted in Civil Litigation
Those who own successful local businesses often rely upon networking to try to meet potential customers, referral sources, future employees and investors. That networking can occur any time and any where people meet, including while attending religious services. You may feel a connection to someone who shares your faith and attends the same church. You may feel that person is also more trustworthy because of that apparently shared faith, but your feelings may be wrong.
Steven McKinlay and Kristi McKinlay of Coto de Caza were arrested in December (just before Christmas) and are facing grand theft and fraud charges. The Orange County District Attorney’s office claims they bilked investors, including people they knew through their church, out of more than $3 million, according to the Orange County Register.
They are the owners of God’s Sports Company located in Foothill Ranch. The McKinlays have been charged with a dozen felonies, including using untrue statements in the purchase or sale of a security, grand theft and the use of a device in a scheme to defraud. If convicted the two could be imprisoned up to 23 years and eight months.
Law enforcement claims,
- The two victimized at least ten people, including a former Major League Baseball player, a friend who gave them money he received due to an injury and a person being treated for cancer who wanted to build an inheritance he could pass on to his family.
- Investors, many of whom knew the McKinlays through the church they attended, paid them from $22,500 to more than $700,000 to invest in God’s Sports Company.
- The McKinlays failed to tell investors about Steven McKinlay’s prior bankruptcy filings and property liens that had been filed against the pair.
- Some of the “invested” money was used as part of a Ponzi scheme where money provided by newer investors repaid some of the older ones.
- The church got the benefit of a $50,000 donation from the McKinlays paid from investor funds.
- The McKinlays got the benefit of the rest. Instead of being used to build the business money believed to have been invested instead went to the couple’s personal use including $17,000 a month rent for two homes, payment for their daughter’s wedding, a car and an Angel Stadium luxury suite.
The Orange County District Attorney’s Office issued a statement about the case and the alleged fraud that was involved. The scheme is described as an “Affinity Fraud.”
- This involves members of a particular group being targeted by those trying to raise funds.
- Those engaging in the fraud may be members of the group or just pretending to belong.
- Community or religious leaders may fall victim not only by making investments but may vouch for the embezzlers and tell others the investments are worthwhile.
- Affinity fraud commonly happens with church members. Victims may feel a false sense of trust in a person who preaches morals and ethics.
- This type of fraud can occur among any group that is bound by some interest, the same nationality, race or even those living in the same senior living communities.
The McKinlays are being held in lieu of $3 million bail. Kristi McKinlay, who is a CPA, has plead not guilty to the charges. The Orange County District Attorney’s Office office stated if they want to post bond the McKinlays will need to prove the money is from a “legal and legitimate” source.
The Dana Point Times reports that there has been an outpouring of support by the community for Kristi McKinlay. Her ex-husband, Don Kindred, told the newspaper he thinks Kristi is a victim in the case. He said she’s well respected in the community, was a leader in the Rotary Club and raised a lot of money.
The McKinlays apparently did raise a lot of money for God’s Sports Company but whether it was properly spent remains to be seen. Before investing money in any business, especially a small, local business, you must do your due diligence and thoroughly vet the business and its owners.
If you have fallen victim the the McKinlay’s alleged fraud or some other investment fraud, contact our office so we can talk about what happened, the laws that may apply in the situation and your best options for recovering your lost money.
